Feb 2, 2013

Tiger Airways is one step closer to selling a majority stake in its
Australian wing to Virgin Australia after its shareholders gave the go-ahead
yesterday.

During an extraordinary general
meeting that was attended by 130 shareholders, all supported the move by the
Singapore-based budget carrier to sell 60 per cent of Tiger Australia to
Virgin.

But Tiger Airways is still
waiting for the Australian Competition & Consumer Commission (ACCC) to
approve the proposal.

Virgin Australia will pay about
A$35 million (US$36 million) for the majority stake. The joint venture will
allow Tiger Australia to grow its fleet from 11 to up to 35 planes by 2018. The
Tiger brand name will remain under a 20-year branding deal.

Tiger Airways Holdings will
continue to control 40 per cent of Tiger Australia and have two seats in its
six-member board. Apart from operating Tiger Singapore and Tiger Australia, the
group has stakes in Indonesia's Mandala Airlines and South East Asian Airlines
in the Philippines.

Koay Peng Yen, Tiger's group
chief executive officer, said yesterday that Virgin Australia - the second
biggest airline in the Australian market - will be a good partner for Tiger
Australia because it has a larger operation Down Under and "deeper market
knowledge".

He added that the immediate
proceeds of S$44 million (US$36 million) can be used for working capital and to
reduce outstanding loans.

At the meeting, Tiger Airways
chairman J.Y. Pillay said running Tiger Australia has been a "tough uphill
climb and we are nowhere near the summit".

The Melbourne-based airline had
its entire fleet grounded for six weeks in 2011 by the country's aviation
regulator over safety concerns.

Jetstar, owned by Qantas, has
cornered Australia's budget airline market with a 90 per cent share while Tiger
Australia has a 10 per cent share.

Pillay said Tiger Australia is
too small a player in Australia and needs a stronger partner to get a critical
mass of passengers.

Singapore Airlines, which owns a
third of Tiger, will spend about S$133 million (US$107 million) to buy a 10 per
cent stake in Virgin Australia.

ACCC chairman Rod Sims had
earlier this month expressed his reservations about the planned takeover of
Tiger Australia by Virgin Australia, describing it as "complicated".

Pillay said he is confident that
the ACCC will approve the Virgin-Tiger partnership.

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